A divorce case will involve a number of different types of financial issues. Depending on the complexity of a couple’s finances and the marital and separate assets they own, determining how to divide marital property can be a complicated process. Retirement accounts are one type of property that may need to be addressed during the divorce process, and couples will need to make sure they understand the issues that may affect how these accounts will be divided. 

Division of 401(k) Accounts, IRAs, and Pensions

Retirement savings accounts may be valuable assets that a person will rely on to provide for their financial needs in the future. When an account in one spouse’s name was created or contributed to during a couple’s marriage, it will usually be considered a marital asset that will need to be addressed during the divorce process. Couples may take a few different approaches when dividing these accounts, such as splitting the funds in an account equally, or allocating a certain percentage of an account to each spouse, or having each spouse keep accounts in their names while ensuring that other assets are divided in a manner that is fair and equitable.

When spouses choose to divide the funds in an account, they will need to follow the correct legal procedures to ensure that they will not be required to pay early withdrawal penalties. For employer-sponsored accounts such as 401Ks, a “Qualified Domestic Relations Order” (“QDRO”) can be prepared, and this “QDRO” will provide instructions to the retirement plan administrator on how funds should be transferred.

Most people are familiar with the concept of a prenuptial agreement, or prenup. These types of agreements are signed by couples before getting married, and they may address issues related to the ownership of property and decide how certain matters will be handled if the marriage ends in divorce. What some people may not realize is that a couple can also create a similar type of agreement after they are already married. These agreements are known as postnuptial agreements, or postnups. By understanding the situations where a postnup may be beneficial, a couple can determine whether creating this type of agreement will be a good idea.

Situations Where Postnuptial Agreements Can Provide Protections for Spouses

A postnuptial agreement can address certain types of financial or property-related issues, detailing how these matters will be addressed if a couple chooses to end their marriage and pursue a divorce or legal separation. Spouses may decide how their marital property will be divided, or whether one spouse will pay spousal maintenance (a.k.a. alimony or spousal support) to the other. Some reasons why it may be a good idea to make these decisions ahead of time through a postnup include:

• A spouse plans to start a business - Ownership of a family business is often one of the most complex issues to address during the divorce process. If one spouse is a business owner, they may want to make sure their business will be protected from dissolution during divorce, and they can use a postnuptial agreement to ensure that they will be the sole owner of the business. A postnup may also provide the non-business-owner spouse with financial protections, such as by ensuring that the marital home or other assets will not be placed at risk if the business experiences financial difficulties.

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After getting a divorce, you may be looking for a fresh start, or you may be considering a new direction in your life. This may include plans to relocate to a new home in a different community. While this can be a beneficial change that may allow you to cut down on expenses, pursue new career opportunities, or live closer to members of your family, you will want to be aware of any legal issues that may affect your ability to move. If you share custody of your children with your ex-spouse, you will need to follow certain steps during the parental relocation process. By working with an attorney who is experienced in post-decree matters, you can make sure you meet all of your legal requirements while addressing any disputes with your ex-spouse or other issues that may arise.

The Parental Relocation Process

When you are making plans to move, you will want to determine whether this change will need to be addressed through the legal system. Illinois law details when a move is considered a parental relocation. If you live in DuPage, Kane, Cook, Lake Will, or McHenry County, and you are planning to move at least 25 miles away from your current home to a new home either inside or outside of Illinois, you may need to receive permission from the court.

If your planned move meets the requirements to be considered a parental relocation, and you have primary physical custody of your children or share equal parenting time with your ex-spouse, you must first notify your ex of your relocation plans. Most of the time, a written notice must be provided to your ex-spouse at least 60 days before the date that you plan to move, and it must state the date of the relocation, the address of the new residence, and, if the relocation will be temporary, the amount of time that it will last. If it would not be possible or practical to provide 60 days’ notice, you should provide notice at the earliest possible date. You must also file a copy of this notice with your local circuit court.

If you are planning to get a divorce, your ability to support yourself financially will likely be one of your primary concerns, especially if you earn a lower income than your spouse or are a stay-at-home parent. As you make plans to address your living situation and determine how you will cover your ongoing expenses, you will want to determine whether you will be able to receive financial support from your spouse. Spousal maintenance, which is also known as spousal support or alimony, may be available, but to receive this form of support, you will usually need to demonstrate that it is needed.

Factors Considered When Addressing Spousal Maintenance

When addressing issues related to spousal maintenance, it is important to understand the purpose of this form of support. When a couple gets divorced, they should be able to continue living at the standard they enjoyed while they were married. Spousal support may address a disparity between spouses’ incomes and ensure that a lower-earning spouse can maintain their standard of living. Maintenance is based solely on spouses’ economic circumstances and needs rather than the reasons they are getting divorced. In fact, Illinois law states that “marital misconduct” will not affect the decisions about whether to award spousal support, so maintenance cannot be used as a penalty for infidelity or other actions or behavior by a spouse.

You and your spouse may be able to reach an agreement about spousal support in your divorce settlement. However, if your spouse does not agree that they should pay support, you may need to request that maintenance be awarded by the judge in your case. When deciding whether spousal support is appropriate, the judge may look at issues such as:

A divorce will affect the finances of spouses in multiple ways. During the divorce process, spouses will need to identify all of the marital assets they own and determine how these assets will be divided. The property division process can become especially complex if either spouse owns a family business. Because a business may be one of the most valuable assets a couple owns, and it may serve as a source of income for one or both spouses, a couple will need to determine how ownership of a business will be handled going forward.

Options for Ownership of a Marital Business

A family business will be considered a marital asset if it was founded or acquired while a couple was married. If one spouse owned a business before getting married, it will usually be considered separate property. However, any increase in value for a non-marital business during a couple’s marriage may need to be addressed during the divorce process, especially if these increases may be partially attributed to efforts by the non-owner spouse or investments in the business using marital funds.

The monetary value of a business will need to be determined to ensure that it and other marital assets can be divided fairly. There are multiple methods that may be used during the business valuation process. The value of assets owned by the business may be calculated, and any business debts or liabilities may be subtracted. A valuation may also consider the income earned by the business over the past several years and the potential for growth in the near future. A couple may also consider other similar businesses that have been recently sold to estimate the potential purchase price of a family business.